curs 1 business analysis 2013

ADVANCED BUSINESS ANALYSIS

Prof.univ.dr. Ion ANGHEL, FRICS, REV, MAA

TOPICS (I)

1. The Nature of Strategic Business Analysis2. The environment and competitive forces3. Internal Resources, capabilities and

competences4. Stakeholders, governance and competences5. Strategies for competitive advantage6. Other elements of strategic choices

TOPICS (II)

7. Methods of strategic development8. Organizational structure 9. Business Process change10. The role of information technology11. Marketing

TOPICS (III)

12. Project management I – The business case13. Project management II – Managing the

project to its conclusion14. Financial Analysis15.Strategy and people16. Strategic development and managing

strategic change

Syllabus

• The aim is – to apply relevant knowledge and skills and to

exercise professional judgment in assesing strategic position, –determining strategic choice and – implementing strategic action through

beneficial business process and structural change

Objectives of the Syllabus

• Assess the strategic position of an organization• Evaluate the strategic choices available• Discuss how an organization might go about its

strategic implementation • Evaluate and redesign business process and

structure to implement and support the organization’s strategy

• Integrate appropriate information technology solutions to support the organization strategy

Objectives of the Syllabus (cont.)

• Advice on the principles of the project management to enable the implementation of the aspects of the organization’s strategy with the twin objectives of management risk and ensuring benefits realisation

• Analyse and evaluate the effectiveness of a company’s strategy and the financial consequences of implementing strategic decisions

• The role of leadership and people management in formulating and implementing business strategy

Chapter I The Nature of Strategic Business Analysis

OBJECTIVES1.Describe the common vocabulary of Strategic Management (SM) and why SM is important2.Describe the different levels of strategic planning for a profit seeking and for non – profit organization3. Describe the JSM model 4. Describe the JS lenses5. Explore the scope of business analysis and relationship

with SM

Chapter I The Nature of Strategic Business Analysis

1. The common language of strategic planning

2. The rational top – down approach in strategic planning

3. Alternative approaches

4. The Strategy lens

The Nature of Strategic Business Analysis1. The common language of strategic planning (1/9)

• Strategic planning • Long term (time-horizon 5 years or beyond)• Considers the whole organization

• Characteristics:• It gives direction to the whole organization and integrates its

activities• It considers all the stakeholders• It looks at how to gain a sustainable competitive advantage• It relates the organization, its resources, competences to its

environment

1. The common language of strategic planning (2/9)

• Definition :

• Strategy is a pattern of activities that seeks to achieve the objectives of the organisation and adapt its scope, resources and operations to environmental changes in the long term

1. The common language of strategic planning (3/9)

Advantages:• Forces organisations to look ahead• Improve the organisation’s fit with its environment• Makes best use of scarce resources• Influence the future (advertising, lobbying etc)• Provide direction for the business• Monitor progress (control)• Ensure consistent goals and objectives

1. The common language of strategic planning (4/9)

Disadvantages:• Cost = time & money / “Paralysis by analysis”• Bureaucracy development• Plan = straightjacket and opportunities are ignored

because there are not in the plan• May be difficult to apply in rapidly changing markets• Less relevance in crisis

1. The common language of strategic planning (5/9)

Strategic planning is very important when:a) There are long lead times; b) The business need to be turned around; c) There is high capital expenditure;d) Many stakeholders are affected.

Lessons from IBM case (pag.4-5)

1. The common language of strategic planning (6/9)

Lessons from IBM case

In the 1970 was one of the most successful and profitable companies in the world

In the ‘90 IBM reported the largest corporate loss ever made

IBM did not correct predict the revolutionary effect that PCs would have on manufacturing and consumers

1. The common language of strategic planning (7/9)

? For students

How important is Strategic planning ? students answers• A health service• A small building contractor

1. The common language of strategic planning (8/9)

• A health service

– Strategic planning is vital.

– Hospitals are hugely expensive and take years to plan and build and their provision must be closely aligned with population trends and treatment advances.

– Training medical staff is also a long-term process. If hospital and other health service facilities are inadequate, many people will be adversely affected.

1. The common language of strategic planning (9/9)

• A small building contractor

– Relatively little long-term planning is needed.

– If the builder buys and develops land, then some planning will be needed to ensure that land and planning permission can be acquired.

– Otherwise, many builders work from job to job using a high proportion of sub-contractors.

2. The rational top – down approach in strategic planning (1/10)

There are three steps in strategic planning

– Strategic analysis

– Strategic choice

– Strategic implementation (strategy into action)

2. The rational top – down approach in strategic planning

• See Diagram page.6

2. The rational top – down approach in strategic planning (3/11)

• Johnson, Scholes, Whittington (JSW model)– Interdependencies between: – Strategic analysis, – Strategic choice, – Strategic implementation (strategy into action)–The strategic planning can begin at any point• Example: a company decide to launch internet

sales before strategic analysis

2. The rational top – down approach in strategic planning (4/11)

A. Strategic position analysis:• The environment – Competitors, markets, regulations, discoveries, opportunities

and threats

• The strategic capabilities – Resources, competences, strengths and weaknesses

• The culture, beliefs and assumptions of the organisation• The expected power of stakeholders – what do the stakeholders want ? Will employees co operate?

2. The rational top – down approach in strategic planning (5/11)

• The aim of strategic analysis– To form a view of the main influences on the

present & future of the organization.• The PESTEL environmental variables: – Political

– Economic

– Social

– Environmental

– Legal

• The resources availability• The aspiration & expectations (shareholders, managers,

owners, unions etc.)

2. The rational top – down approach in strategic planning (6/11)

B. Strategic choices:

• Generation of strategic options: growth, acquisition, diversification or concentration

• Evaluation of the options to asses their relative merits and feasibility

• Selection of the strategy or option

2. The rational top – down approach in strategic planning (7/11)

Strategic options• A strategy can be pursued in 2 ways.– Internal development– External development (merger& acquisition,

franchising/licensing)• Example: Garanti Bank, La mama restaurant

• Classroom discussion .– Mega Image vs Mic.ro

2. The rational top – down approach in strategic planning (8/11)

Strategic options• How you compete:• Porter define generic competitive strategies:

• Lowest cost or • Differentiation

• Where you compete:• Ansoff describes product-market strategies

• which market you should enter or leave

2. The rational top – down approach in strategic planning (9/11)

•

C. Strategy into action/ implementation (3 elements)• Organizing/ structuring • Internal development need to split activity into

regional divisions

• Enabling resources to support the strategy• Appropriate peoples and fixed assets

• Managing change• Employees‘ fears and resistance • (Pepsi in Russia – 2 hours off each day for cleaning)

2. The rational top – down approach in strategic planning (10/11)

Case study:• Tarom considering low-fare subsidiary;

– Discussions in the classroom

2. The rational top – down approach in strategic planning (11/11)

• Strategic position– Competition, oil price forecast , passenger forecast,

availability of cheap landing rights, effect of the main brand

• Strategic choices – Which routes to launch, set up a new company or buy an

existing cheap airline, which planes to use

• Strategic implementation– How autonomous should the new airline be?, recruit and

train staff, implementation the internal booking system, acquisition of aircraft, obtaining the landing slots

3. Alternative approaches (1/8)

(A1) Emergent strategy• Mintzberg (1987) suggest that in real word the

strategies evolves over time (emerge) rather than result from an in-depth analysis;

• Emergent strategy– Example: a salesman visits a customer. The product isn’t

good and they put together some changes. The salesman coming back to the company and get it right after couple of rounds.

3. Alternative approaches (2/8)

(A2) Freewheeling opportunities • They prefer to see and grab opportunities

• Planning takes to much time and is too constraining

• Often such peoples are entrepreneurs

3. Alternative approaches (3/8)

(B) Level of strategic planning– Corporate strategy• What business is in the firm, what businesses should it be in

– Business strategy• Analyze each strategic business unit (SBU)• Which product should be developed• Which market to enter

– Functional strategy• Look at how different functions of the business support the

corporate and business strategy

3. Alternative approaches (4/8)

• Example Gap– Corporate strategy• Should another range of shop to be established ?

(Banana Republic)• Should the company raise the capital

– Business strategy• What markets should the new range of shops open it• How often should inventories be changed

– Functional strategy• Look at how different functions of the business support

the corporate and business strategy

3. Alternative approaches (5/8)

(C)Strategic management & the entity’s dimension• Small businesses – Operates in single market with limited product range– Expectations of founders – dominate

• Key strategic issues– Pressure from large competitors, development of

unique capabilities, niche strategies– Strategies may be limited by financing opportunities;

relationship with banks is vital– Example: “Regina Maria” vs “Promed System”

3. Alternative approaches (6/8)

• Multinationals – Operates in many diverse markets with a wide

range of products

• Key strategic issues– Control of diverse businesses is vital, relationship

between head office and local divisions– Business unit strategy resource allocation and

coordination (logistics)

3. Alternative approaches (7/8)

(D).Strategic manag. and type of organization • Public sector– Significant government influence– Planning horizon driven by political rather than

market condition

• Key strategic issues– Role of ideology– Competition for resources is not based on market rules– Strategic options limited by funding (tax implications)

3. Alternative approaches (8/8)

• Non – Profit Organizations– Key objectives are not financial– Funding often not linked to receipt of services

(discussion: professional associations)

• Key strategic issues– Key decision usually centralized – Competition for funds (meeting expectations of funding

bodies)

4. The Strategy lens (1/6)

Johnson and Scholes (JS) launch “strategic lens” concept which means three ways of viewing

– Strategy as design– Strategy as experience– Strategy as ideas

• Managers should try to look at strategy through all three lenses in turn

4. The Strategy lens

4. The Strategy lens (3/6)

• Strategy as design. – This is the view that strategy formulation is a

rational, logical process where information is carefully considered and predictions made.

– Strategic choices are made and implementation takes place.

– Essentially this is the same as the rational planning model discussed earlier

4. The Strategy lens (4/6)

• Strategy as experience. – This is the view that future strategies are based on

experiences gained from past strategies. – There is strong influence from the received wisdom

and culture within an organisation about how things should be done.

– This reflects the emergent approach described above

4. The Strategy lens (5/6)

• Strategy as ideas. – This is the view that innovation and new ideas are

frequently not thought up by senior managers at the corporate planning level.

– Rather, new ideas will often be created throughout a diverse organisation as people try to carry out their everyday jobs and to cope with changing circumstances

4. The Strategy lens (6/6)

• IBM Case (discussed earlier)

– IBM saw strategy as a matter of design and probably one of experience

– No Strategy as ideas

5. Understanding the P3 syllabus

The P3 syllabus has two main perspectives

• The external forces that shape the environment of an organisation: – the behaviour of customers – the initiatives of competitors – the emergence of new laws and regulations

5. Understanding the P3 syllabus

The internal ambitions and concerns that exist within an organisation: – the desire for growth – the design of processes – the quality of products and services – the competences of employees – the financial resources

3 levels

MULTUMESC PENTRU ATENTIE !